Appellant entitled to 12% interest on pre-deposit amount till refund. Order for disbursement within 45 days.

The Tribunal held that the appellant was entitled to interest at 12% per annum on the pre-deposit amount from the date of deposit till the date of refund. The Tribunal allowed the appeal, directing the Adjudicating Authority to disburse the interest amount within 45 days from the order's receipt, granting the appellant consequential benefits.

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Issues:
Whether the appellant is entitled to interest on the amount of pre-deposit under Section 35FF of the Act.

Analysis:
The appellant, engaged in manufacturing pharmaceutical products, claimed exemption for their product Phenotil under Notification No. 6/2002-CE. The Revenue disputed the exemption, leading the appellant to deposit duty under protest without charging it in their invoice. Subsequently, the Tribunal ruled in favor of the appellant, allowing a refund of duty paid through PLA but rejecting the amount paid through cenvat credit. The Revenue appealed against the refund grant, and the Commissioner (Appeals) allowed their appeal, rejecting the appellant's claim. The appellant then appealed to the Tribunal against the total rejected refund amount of Rs. 9,35,97,502. During the appeal, the Revenue demanded the refunded amount be deposited back with interest, leading the appellant to deposit Rs. 3,24,05,000 under protest, citing it as a pre-deposit under Section 35F.

The Tribunal, in a subsequent order, held that the amount of Rs. 9,35,97,502 deposited under protest from April 2006 to March 2014 was refundable to the appellant. Subsequently, the appellant requested a refund, including the pre-deposit amount of Rs. 3,24,05,000 with interest as per Rule. While the pre-deposit amount was refunded, the claim for interest under Section 35FF was rejected on the grounds that the refund was given within three months of the application date. The appellant contended that the rejection of interest was incorrect, citing Section 35FF which provides for interest on pre-deposit upon successful appeal, and argued that the old provisions of Section 35FF applied as the deposit was made in 2018.

Upon review, the Tribunal found the lower court erred in denying interest. Citing a previous ruling, the Tribunal held that the appellant was entitled to interest at 12% per annum from the date of deposit till the date of refund. Drawing on the Supreme Court's decision in Sandvik Asia Ltd. vs. CIT-I, Pune, the Tribunal allowed the appeal, directing the Adjudicating Authority to disburse the interest amount within 45 days from the order's receipt, granting the appellant consequential benefits.

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